Restaurant Sector M&A Report – June 2025

Restaurant M&A Volume Suppressed, Demand Remains Intact for Established Brands

Capstone’s inaugural Restaurant M&A Report finds that merger and acquisition (M&A) activity in the sector has softened year to date (YTD) amid macroeconomic headwinds, including persistent inflation, tariff uncertainty, labor cost pressures, and capital markets volatility. Despite the pullback, dealmaking is expected to accelerate in late 2025 and into 2026 as buyers gain clarity around regulatory changes and cost inflation moderates.

The Restaurants sector experienced significant volatility following the global pandemic, but normalization of consumer traffic, preferences, and business operations has continued at a steady pace. Select restaurant operators have recorded upticks in revenue despite a precarious macroeconomic backdrop. Prospective tariffs have injected uncertainty in the market, lowering sentiment among business owners and consumers alike. Inflation has remained top of mind in the sector, with operators closely watching rising labor and food costs while consumers weigh the spread between grocery prices and the cost of eating out. Quick Service Restaurants (QSR) have increasingly promoted value offerings amid heightened trade-down behavior—where lower middle- and lower-class consumers have looked towards grocery and convenience stores—resulting from prolonged inflation, geopolitical uncertainty, and higher-for-longer interest rates.

Restaurant M&A has experienced a decline in activity YTD, falling 28.9% year-over-year (YOY). Many operators have elected to wait out the current market uncertainty pertaining to tariff policy from the new U.S. administration. Franchisors have accounted for the majority of deal volume YTD as buyers prioritize comfortability with brand longevity, often targeting tier 1 brands. The Franchisee and Independent Brand segments have each accounted for an equal, minority share of the remaining total sector deal volume to date. Notably, financial sponsors have comprised a third of sector deal volume, with all transactions being platform deals. Private equity’s YTD contribution to sector-wide deal flow has only been surpassed by 2021, where low interest rates made leveraged acquisitions highly attractive. Capital deployment in restaurant platforms YTD has mirrored the early signs of a private equity dealmaking rebound in the broader middle market, a trend Capstone expects to continue into the latter half of 2025 and into 2026.

Also included in this report:

• How consumer spending dynamics are impacting the four restaurant segments.
• What buyer types are contributing to M&A volume and a breakdown of acquisition activity by target operation size (number of units) and operator model (franchisee, franchisor, and independent brands).
• Which key business characteristics drive valuations in Restaurant M&A.
• A Restaurants sector case study from Capstone’s Turnaround and Restructuring Advisory Services

Capstone Partners’ Consumer Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the consumer and retail industries. Our team partners with leading mid-to-large sized restaurants that serve growing end-markets. For more information on the Restaurant M&A trends featured in this report or to speak with one of our Consumer Investment Banking Team members about how to grow, value, and/or sell your business, contact us today to start a conversation.